MSMEs on verge of collapse due to non-payment of nearly Rs six

MSME Minister Nitin Gadkari on Thursday expressed serious concern over non-payment of nearly Rs six lakh crore dues to micro and small industries by government and private undertakings, and said the Centre is working on an action plan to ensure the payments within three months.

Responding to a discussion on the working of the Ministry of Micro, Small and Medium Enterprises (MSME) in Rajya Sabha, Gadkari also announced that the government will revamp khadi and village industries within three months and make it more export oriented.

The minister said all banks -- scheduled, private, cooperative and NBFC -- are now allowed to lend money to the MSME sector and all loans sanctioned and disbursed under various schemes will be monitored through a central portal in his ministry.

"Government undertakings procure products but do not pay for three-four months. MSMEs are on the verge of collapse. Passing a legislation is easy.... There are 20,000-22,000 cases. As per my estimates, big industrialists, state government, central government undertakings owe Rs 5.5 lakh crore to Rs 6 lakh crore to small industries," Gadkari said.

"This is a serious situation. We are in discussion with the Finance Ministry and we will find out some solution to it.... We have to give their payments within three months," he added.

While six lakh industries have been restructured under the RBI-appointed UK Sinha committee on MSMEs, the minister said, a proposal to create a "Fund of Funds" of Rs 10,000 crore has been approved by the Finance Ministry and the Cabinet nod will be sought on it.

In addition, the Finance Ministry has approved a proposal for a "Distressed Asset Fund" of Rs 10,000 crore and the Ministry will send it for the Cabinet nod, he added.

On the Khadi and Village Industries Commission (KVIC), the minister said he will revamp it in three months and the commission will be strengthened professionally.

The ministry will appoint a financial consultant to study and suggest methods to strengthen KVIC.

"A three-member committee under the Chairmanship of Secretary will be set up and we will revamp KVIC in three months and make it export oriented," the minister said.

Acknowledging challenges faced by the sector, Gadkari said the government believed in turning "challenges into opportunities."
The minister added that after review of non-sanction of loans with bank officials, "almost 22,000 proposals are to be disbursed in March 2020."